Real Estate Rights and Benefits for Olim in

Israel

Overview

New immigrants (Olim Chadashim) to Israel receive substantial government benefits designed to make homeownership more accessible and facilitate integration into Israeli society. These benefits can save hundreds of thousands of shekels and make purchasing property significantly more affordable than for regular Israeli residents.

**Bottom Line: **The Israeli government provides three main real estate benefits for olim: dramatically reduced purchase tax, preferential government mortgages, and rental assistance. Together, these can save ₪300,000-500,000+ on a home purchase.

1.  Purchase Tax Benefits (Mas Rechisha)

Current Rates (Effective August 15, 2024)

For olim purchasing their **first residential property **in Israel:

Tax Tiers:

ï           ₪0 - ₪1,978,745: 0% tax (completely exempt)

ï           ₪1,978,745 - ₪6,000,000: 0.5% tax

ï           Above ₪6,000,000: Standard rates apply

ï           Maximum property value: ₪20,183,565 (benefits don't apply above this)

Real Savings Example

For a ₪4,000,000 apartment:

ï           **Regular Israeli citizen **would pay: ~₪240,000 in purchase tax

ï           **Oleh Chadash **pays: ₪10,106

ï           **Savings: ₪229,894 **(~$63,000 USD)

For a ₪3,000,000 apartment:

ï           **Regular Israeli citizen **would pay: ~₪140,000

ï           **Oleh Chadash **pays: ₪5,106

ï           **Savings: ₪134,894 **(~$37,000 USD)

Important Conditions

Eligibility Requirements:

ï           Must be your **first property purchase **in Israel (as of August 15, 2024)

ï           Property must be your **single residency **(you cannot own other properties)

ï           Must be purchased for residential use (not commercial)

Time Frame:

ï           Available from 1 year before making Aliyah **up to **7 years after Aliyah

ï           Time spent in IDF military service is **not counted **toward the 7-year period

ï           For new construction with long building periods: you must make Aliyah within 3 years of signing the purchase agreement

Key Changes (August 2024):

ï           Previous rules allowed multiple property purchases; new rules apply only to first home

ï           Much more generous benefits for primary residences

ï           Properties purchased before August 15, 2024 can choose old or new rules (but not mix benefits)

2.  Preferential Mortgage (Mashkanta Mezuefet / Halva'at Zakaut)

What It Is

A government-subsidized mortgage loan with below-market interest rates, designed specifically for new immigrants purchasing their first home in Israel.

Key Benefits

Interest Rate:

ï           Fixed rate of approximately **3-4.5% **(currently around 4%)

ï           Typically **1.5-2.5% lower **than standard market rates

ï           Rate is fixed for the entire loan period Loan Amount:

ï           Up to **₪200,000-300,000 **depending on eligibility

ï           Average loans range from ₪100,000-200,000

ï           Some areas (development towns) may qualify for higher amounts

Loan Terms:

ï           **20-30 years **repayment period

ï           **No prepayment penalties **(unlike regular Israeli mortgages)

ï           Principal is **linked to inflation (Madad) **- adjusts monthly with CPI

ï           Requires only **5-15% down payment **(vs. 25-40% typically required)

Eligibility

Time Frame:

ï           Must apply within 15 years of making Aliyah Ownership Requirements:

ï           **Cannot have owned property **in Israel within the past 10 years

ï           Must be purchasing your first home in Israel

Family Status:

ï           Married couple (with or without children)

ï           Single parent

ï           Single person aged 21+

How It Works - Point System:

The loan amount is calculated based on a point system considering:

ï           Age

ï           Marital status

ï           Number of children

ï           Years married

ï           Military service in Israel

ï           Years of residence in Israel

Application Process

Step 1: Obtain Teudat Zakaut (Certificate of Entitlement)

ï           Apply through one of seven authorized Israeli banks:

◦           Bank Leumi

◦           Bank Hapoalim

◦           Mizrahi-Tefahot Bank

◦           Bank Discount

◦           Bank Yahav

◦           Bank Otzar HaHayal

◦           Israel Postal Bank

Step 2: Submit Required Documents

ï           Teudat Oleh (immigrant certificate)

ï           Teudat Zehut (Israeli ID)

ï           Pay slips (last 3 months - net income only)

ï           Bank account statements

ï           Proof of address

ï           Previous tax returns if applicable

Step 3: Property Appraisal

ï           Bank arranges property valuation

ï           Determines maximum loan amount (typically up to 75% LTV)

Step 4: Process Regular Mortgage Simultaneously

ï           The preferential mortgage typically covers only part of purchase price

ï           Apply for regular mortgage for remaining amount

ï           Same banks handle both applications concurrently

Important Notes

ï           This is a **supplementary loan **- you'll likely need a regular mortgage too

ï           **Fixed rate only **- variable or non-inflation-linked rates not available

ï           Some areas offer additional **interest-free loans (Ma'anak) **up to ₪50,000

ï           The preferential mortgage counts as part of your overall 75% LTV limit

3.  Rental Assistance (Dira L'hasaha)

Eligibility and Duration

For Olim with Absorption Basket (Sal Klita):

ï           Assistance begins in the **7th month **after Aliyah

ï           Automatically deposited to your bank account

ï           Duration: **4-5 years **depending on Aliyah date

For Olim without Absorption Basket:

ï           Must apply through designated housing assistance companies

ï           Different application process and requirements

Monthly Assistance Amounts

Amounts vary based on:

ï           Family status and size

ï           **Location of rental **(higher in development towns/national priority areas)

ï           **Years of residence **in Israel

Typical Range:

ï           ₪1,000 - ₪3,000 per month ($250-$800 USD)

ï           Higher subsidies available for peripheral/development areas

Conditions

ï           Must be actively renting (lease agreement required)

ï           Must attend **ulpan (Hebrew language courses) **to maintain eligibility

ï           Payments decrease over time (higher in first years, lower in later years)

4.  Capital Gains Tax Exemption (Mas Shevach)

What It Covers

Exemption from Israeli capital gains tax when selling specific assets acquired before making Aliyah.

Coverage

Eligible Assets:

ï           Securities (stocks, bonds)

ï           Real estate owned abroad

ï           Other qualifying investment assets

Time Period:

ï           Valid for **10 years **from date of Aliyah

ï           Applies only to profits from assets acquired before becoming Israeli resident

Important Limitations

ï           Does **NOT **extend to profits from assets purchased after Aliyah

ï           Strict conditions apply - not all asset types qualify

ï           Must prove ownership and acquisition date from before Aliyah

ï           Consult with Israeli tax attorney for specific situations

5.  Loan-to-Value (LTV) Benefits

Higher Financing Ratios

Olim Advantages:

ï           Up to **75% LTV **for first home purchase

ï           Regular Israeli buyers: typically 50-70% depending on circumstances

ï           Foreign non-residents: maximum 50% LTV

What This Means

Example: ₪3,000,000 property

ï           Oleh: Can finance ₪2,250,000 (75%), needs ₪750,000 down payment

ï           Regular buyer: Can finance ₪1,800,000-2,100,000 (60-70%), needs ₪900,000-1,200,000 down

ï           Foreign buyer: Can finance ₪1,500,000 (50%), needs ₪1,500,000 down This makes homeownership more accessible with less upfront capital required.

Additional Benefits and Support

Consultation Services

Free Advisory Centers:

ï           Specialized centers for new immigrants

ï           Information on current real estate market

ï           Legal aspects of transactions

ï           Guidance on choosing appropriate housing

ï           Available through Ministry of Absorption

Nefesh B'Nefesh Support

For North American and UK olim:

ï           Dedicated real estate guidance

ï           English-speaking mortgage specialists

ï           Connection to Anglo-friendly professionals

ï           Hotline: *3680 (in Israel)

ï           Email support: answers@nbn.org.il

Start-Up Support (Related Benefit)

For entrepreneurial olim:

ï           Access to business incubators and accelerators

ï           "Keren Tmura le-Olim" fund for startup grants

ï           Tax incentives for early-stage startups

ï           These can help establish income for mortgage qualification

Strategic Planning for Olim

Before Making Aliyah

1-2 Years Before:

ï           Research neighborhoods and housing markets

ï           Understand current property values in desired areas

ï           Begin saving for down payment

ï           Check credit score in home country

ï           Consider purchasing property even before Aliyah (can use benefits retroactively up to 1 year)

6 Months Before:

ï           Consult with Israeli real estate attorney

ï           Connect with English-speaking mortgage brokers

ï           Understand tax implications in both countries

ï           Plan timeline for applying for benefits

After Making Aliyah

First 6 Months:

ï           Open Israeli bank account (required for all benefits)

ï           Establish Israeli credit history

ï           Begin ulpan (Hebrew courses) for rental assistance

ï           Research specific neighborhoods in person

ï           Attend Ministry of Absorption housing workshops

Months 7-12:

ï           Continue establishing employment/income in Israel

ï           Apply for Teudat Zakaut if planning to buy

ï           Consider renting initially while learning the market

ï           Build relationship with Israeli banks

Years 1-2:

ï           Most experts recommend **renting initially **for 1-2 years

ï           Learn neighborhoods, schools, and commute patterns

ï           Establish financial stability and credit

ï           Watch market trends

ï           Take advantage of rental assistance while searching

Years 2-7:

ï           Apply purchase tax benefits when ready

ï           Utilize preferential mortgage within 15-year window

ï           Consider neighborhoods rising in value

ï           Time purchase strategically based on market conditions

Rent vs. Buy Decision

When to Rent First (Recommended for Most)

Advantages:

ï           Flexibility to explore different neighborhoods

ï           Time to establish income and employment

ï           Learn market without pressure

ï           Benefit from rental assistance (4-5 years)

ï           Build Israeli credit history

ï           Understand local school systems and infrastructure

Who Should Rent:

ï           Uncertain about long-term location in Israel

ï           Need time to establish employment

ï           Want to test different neighborhoods

ï           Limited savings beyond purchase costs

ï           Prefer flexibility during integration period

When to Buy Immediately

Advantages:

ï           Lock in property while benefits available (7-year window)

ï           Avoid rising property prices (market trending upward)

ï           Build equity immediately

ï           Stability for family, especially with children

ï           Take advantage of substantial purchase tax savings

Who Should Buy:

ï           Have substantial capital (₪2+ million liquid)

ï           Certain about long-term location

ï           Have guaranteed employment/income

ï           Desire stability and permanence

ï           Making Aliyah to expensive markets (Tel Aviv, Jerusalem)

Market Context (2025):

ï           Home prices rising 7.8% year-over-year

ï           Tel Aviv up 1.2% monthly, Haifa up 11.7% annually

ï           Supply shortage continues

ï           Demand outstrips supply

ï           Experts predict continued price growth

Required Documentation

For Purchase Tax Benefits

ï           Teudat Oleh (immigrant certificate)

ï           Proof property is first residential purchase

ï           Proof of single residency status

ï           Purchase agreement (sale contract)

ï           Property value appraisal

ï           Tax file opened with Israeli Tax Authority

For Preferential Mortgage

Personal Documents:

ï           Teudat Oleh (immigrant certificate)

ï           Teudat Zehut (Israeli ID card)

ï           Passport

ï           Marriage certificate (if married)

ï           Birth certificates for children

Financial Documents:

ï           Last 3 months of pay slips (net income)

ï           Bank account statements (3-6 months)

ï           Tax returns (if applicable)

ï           Employment verification letter

ï           Assets and liabilities statement

ï           Previous address history

Property Documents:

ï           Purchase agreement

ï           Property appraisal

ï           Tabu (land registry) check showing ownership status

ï           Building permits and approvals

Common Pitfalls to Avoid

1.  Missing Time Windows

ï           Purchase tax benefits expire 7 years after Aliyah (plus military time)

ï           Preferential mortgage must be obtained within 15 years

ï           Don't delay if serious about purchasing

2.  Not Using Professionals

ï           Always use an Israeli real estate attorney (דין עורך)

ï           Consider English-speaking mortgage broker

ï           Don't rely solely on real estate agent

ï           Attorney fees (~₪10,000-15,000) save far more in the long run

3.  Misunderstanding Inflation Linkage

ï           Preferential mortgage principal adjusts monthly with inflation

ï           Your owed amount increases if inflation rises

ï           Typical inflation: ~2-3% annually

ï           Monthly payments stay fixed, but total owed increases

4.  Overextending Financially

ï           Israeli mortgages typically require 25-33% of income for payments

ï           Account for property tax (arnona), building fees (va'ad bayit)

ï           Higher utility costs than many countries

ï           Allow buffer for initial settlement expenses

5.  Not Researching Neighborhoods Thoroughly

ï           Crime rates vary significantly

ï           School quality differs by area

ï           Public transportation access varies

ï           Development plans can affect future property values

ï           Consult with locals and established olim

6.  Forgetting About Additional Costs

Beyond Purchase Price:

ï           Real estate agent fees: 2% + VAT

ï           Attorney fees: ₪10,000-20,000

ï           Property appraisal: ₪2,000-5,000

ï           Registration (Tabu) fees: ~0.5% of property value

ï           Mortgage arrangement fees: ~1-2% of loan amount

ï           Homeowner's insurance

ï           Arnona (property tax): varies by municipality

ï           Va'ad Bayit (building maintenance): ₪300-800+ monthly

7.  Not Maintaining Benefit Eligibility

ï           Must attend ulpan to receive rental assistance

ï           Must maintain primary residence status for purchase tax benefits

ï           Property cannot be rented out if claimed as primary residence

ï           Keep all documentation organized

Special Situations

Making Aliyah with Spouse

ï           Both spouses receive individual benefits

ï           Each spouse retains purchase tax benefits for 7 years

ï           Preferential mortgage calculated for couple jointly

ï           Higher rental assistance for families

Purchasing Before Aliyah

Allowed:

ï           Can purchase up to **1 year before **making Aliyah

ï           Must make Aliyah within timeframe to receive benefits

ï           Can receive retroactive purchase tax refund

ï           For new construction: have 3 years if building ongoing

Process:

ï           Pay full regular purchase tax initially

ï           After making Aliyah, apply for refund

ï           Tax authority reimburses difference

ï           Must make Aliyah within 1 year of signing (3 years for new construction)

Military Service Impact

Benefits:

ï           Time in IDF military service **not counted **toward 7-year window

ï           Service extends your benefit period

ï           Can use preferential mortgage after military service

ï           Special benefits for lone soldiers (בודדים חיילים)

Returning Israeli Citizens (Toshavim Chozrim)

Born Abroad:

ï           May qualify for similar benefits

ï           10-year eligibility window (not 7 years)

ï           Must meet specific criteria

ï           Consult with Ministry of Absorption

Returning After Years Abroad:

ï           May qualify if lived abroad for extended period

ï           Requirements stricter than new olim

ï           Some benefits available, some not

ï           Professional consultation essential

Development Towns and National Priority Areas

Enhanced Benefits:

ï           Higher rental assistance amounts

ï           Additional mortgage subsidies available

ï           Interest-free loans (Ma'anak) up to ₪50,000

ï           Additional purchase tax reductions possible

ï           Employment incentives

Qualifying Areas:

ï           Peripheral regions

ï           Development towns (e.g., Kiryat Shmona, Beit She'an, Dimona)

ï           Areas designated for population strengthening

ï           Check Ministry of Absorption for current list

Comparison: Oleh vs. Regular Israeli Buyer

Purchase Tax Comparison

₪3,000,000 Property:

ï           Oleh: ₪5,106 (0.17% effective rate)

ï           Regular Israeli (first home): ~₪140,000 (4.7% effective rate)

ï           Israeli with multiple properties: ~₪240,000 (8% effective rate)

₪5,000,000 Property:

ï           Oleh: ₪15,106 (0.3% effective rate)

ï           Regular Israeli (first home): ~₪340,000 (6.8% effective rate)

Mortgage Comparison

For ₪2,000,000 Loan over 25 Years:

ï           Oleh Preferential (partial): ₪200,000 at 4% fixed, linked to inflation

ï           Regular Israeli: ₪1,800,000 at 5.5-6.5% (mix of tracks)

ï           Potential savings: ₪150,000-300,000 over life of loan

Down Payment Comparison

₪3,000,000 Property:

ï           Oleh: ₪750,000 (25%) with up to 75% LTV

ï           Regular Israeli: ₪900,000-1,050,000 (30-35%)

ï           Foreign Buyer: ₪1,500,000 (50%)

Important Resources

Government Agencies

Ministry of Aliyah and Integration:

ï           Website: www.gov.il (search: Aliyah benefits)

ï           Hotline: *6000

ï           In-person offices throughout Israel

Ministry of Housing and Construction:

ï           Preferential mortgage applications

ï           Teudat Zakaut certificates

ï           Website: www.gov.il/he/Departments/Topics/mortgage_assistance_new_immigrant

Israel Tax Authority:

ï           Purchase tax issues

ï           Capital gains tax questions

ï           Website: www.gov.il/taxes

Non-Profit Organizations

Nefesh B'Nefesh (North America & UK):

ï           Website: www.nbn.org.il

ï           Hotline (in Israel): *3680

ï           Email: answers@nbn.org.il

ï           English-speaking advisors

ï           Comprehensive online resources

Jewish Agency:

ï           Pre-Aliyah consultations

ï           Financial planning assistance

ï           Regional offices worldwide

Professional Services

Real Estate:

ï           Use only licensed agents (תיווך רשיון)

ï           Seek English-speaking professionals if needed

ï           Verify credentials with Ministry of Finance

Legal:

ï           Essential to use Israeli real estate attorney

ï           Specializing in olim purchases highly recommended

ï           Expect fees: ₪10,000-20,000

Mortgage Brokers:

ï           Can save significant money on rate negotiations

ï           Fee typically 1-2% of loan amount

ï           Many specialize in olim (Anglo mortgages)

ï           Coordinate with multiple banks simultaneously

Accounting/Tax:

ï           Essential for complex situations

ï           US citizens need specialized advice (FATCA, tax treaties)

ï           Can optimize between Israeli and foreign tax obligations

Tax Considerations for US Citizens

US-Israel Tax Treaty

ï           US-Israel tax treaty prevents double taxation

ï           Must still file US taxes annually

ï           Foreign Bank Account Reporting (FBAR) required

ï           FATCA compliance necessary

Reporting Requirements

Annual Filings:

ï           US tax return (even if no tax owed)

ï           FBAR if accounts exceed $10,000

ï           Form 8938 (FATCA) if thresholds met

ï           Israeli tax return

Property Sale Reporting

ï           Capital gains may be reportable in both countries

ï           Use Foreign Tax Credits to avoid double taxation

ï           Professional tax preparation highly recommended

ï           Consult CPA familiar with US-Israel taxation

Financial Planning Timeline

Year Before Aliyah

ï           Save for down payment (25% of property value + closing costs)

ï           Improve credit score in home country

ï           Research neighborhoods online

ï           Connect with existing olim communities

ï           Budget: ₪750,000-1,500,000 minimum liquid for ₪3M property

First Year After Aliyah

ï           **Month 1-3: **Open bank account, establish credit

ï           **Month 4-6: **Begin building Israeli employment history

ï           **Month 7+: **Rental assistance begins (if eligible)

ï           Continue saving while learning market

ï           Budget: Living expenses + continuing to save

Years 2-7

ï           Apply for Teudat Zakaut (if planning purchase)

ï           Schedule property viewings

ï           Hire attorney when ready

ï           Submit mortgage applications

ï           Complete purchase process

Current Market Insights (2025)

Price Trends

ï           National average: Rising 7.8% annually

ï           Tel Aviv: +1.2% monthly, highest monthly increase

ï           Haifa: +11.7% annually, highest annual growth

ï           Jerusalem: Stable with moderate increases

ï           Market remains strong despite regional challenges

Supply and Demand

ï           Housing supply shortage continues

ï           Demand significantly outpaces supply

ï           New construction cannot keep pace

ï           Wait times for new builds: 2-4 years typical

Expert Consensus

For Olim:

ï           Rent initially for most situations (1-2 years)

ï           Take time to learn neighborhoods and market

ï           Use rental assistance while searching

ï           Buy when certain of location and financially stable

ï           Don't rush - benefits available for 7-15 years

Exception - Immediate Purchase:

ï           Large capital available (₪2M+ liquid)

ï           Certain of permanent location

ï           Stable income immediately upon arrival

ï           Strong preference for ownership stability

Frequently Asked Questions

Can I buy before making Aliyah?

Yes, up to 1 year before. You'll pay regular purchase tax initially and receive refund after Aliyah. For new construction, you have up to 3 years to make Aliyah.

What if I own property abroad?

You can still receive oleh benefits for Israeli property purchase. This is your first property in Israel

that matters. However, you may need to address tax implications in both countries.

Can I rent out my property after purchasing?

If you claimed it as your primary residence for purchase tax benefits, you cannot immediately rent it out. It must be your actual primary residence. Consult attorney for specific timeframes.

What if property values rise during my benefit period?

Benefits apply at time of purchase. Even if you wait several years and prices rise significantly, you still receive the same percentage benefits on the higher price.

Do benefits apply to commercial property?

Different rules apply. Some benefits available but typically less generous. Consult with commercial real estate attorney.

Can both spouses use benefits on separate properties?

No. The purchase tax benefit applies per household for a single primary residence, not per individual.

What happens if I leave Israel after purchasing?

Complex situation with tax implications. If you leave permanently within certain timeframes, you may need to repay benefits. Consult tax attorney before any decisions.

Are parking spaces and storage included?

Usually yes if part of property transaction and registered together in Tabu. Confirm with attorney.

What about property in West Bank settlements?

Different rules may apply. Political and legal complexities exist. Specialized consultation essential.

Action Checklist

Before Aliyah

ï           [ ] Research neighborhoods thoroughly

ï           [ ] Connect with existing olim in target areas

ï           [ ] Save 25-30% of anticipated property value

ï           [ ] Identify English-speaking real estate attorney

ï           [ ] Research mortgage brokers specializing in olim

ï           [ ] Understand tax implications in both countries

ï           [ ] Organize all personal documents for translation

Immediately After Aliyah

ï           [ ] Open Israeli bank account (required for benefits)

ï           [ ] Apply for Teudat Zehut (Israeli ID)

ï           [ ] Begin ulpan classes (required for rental assistance)

ï           [ ] Register with Ministry of Absorption

ï           [ ] Apply for rental assistance if eligible

ï           [ ] Visit target neighborhoods in person

ï           [ ] Attend Ministry housing workshops

When Ready to Purchase (Within 7 Years)

ï           [ ] Apply for Teudat Zakaut (if using preferential mortgage)

ï           [ ] Hire Israeli real estate attorney

ï           [ ] Engage mortgage broker if desired

ï           [ ] View properties with licensed agent

ï           [ ] Arrange property appraisals

ï           [ ] Submit mortgage applications to multiple banks

ï           [ ] Complete Tabu (land registry) searches

ï           [ ] Sign purchase agreement with attorney review

ï           [ ] Coordinate closing date

ï           [ ] Arrange property insurance

ï           [ ] Set up utilities and arnona payments

Final Recommendations

**1.        Take advantage of these benefits **- They represent hundreds of thousands of shekels in savings that can make homeownership accessible.

**2.        Don't rush **- Most experts recommend renting initially for 1-2 years while establishing yourself and learning the market.

**3.        Use professionals **- Attorney fees of ₪10,000-15,000 can save you ₪100,000+ and prevent serious legal issues.

**4.        Plan strategically **- Your 7-year window provides time to find the right property at the right time.

**5.        Maintain eligibility **- Keep documents organized, attend ulpan, and maintain primary residence status.

**6.        Consider market timing **- While prices are rising, buying when financially stable matters more than trying to time the market perfectly.

**7.        Build community connections **- Existing olim are invaluable resources for neighborhood insights and professional recommendations.

**Disclaimer: **This guide provides general information as of 2025 and should not be considered legal, financial, or tax advice. Israeli real estate and tax laws are complex and change frequently. Always consult with qualified professionals—including Israeli real estate attorneys, mortgage specialists, and tax advisors—before making any property purchase decisions. Individual circumstances vary significantly, and professional guidance tailored to your specific situation is essential.

Updated on: 01/02/2026